Press Releases

RENO, Nev.--(BUSINESS WIRE)-- Eldorado Resorts, Inc. (NASDAQ: ERI) (“Eldorado,” “ERI,” or “the Company”) today reported operating results for the third quarter ended September 30, 2017.

“Eldorado’s record third quarter results exhibit the potential that we envisioned when we announced the acquisition of Isle of Capri a little over a year ago. Third quarter Adjusted EBITDA rose 16.2% year over year to $112.1 million despite a 1% net revenue decline that was partially attributable to the impact of two separate hurricanes,” said Gary Carano, Chairman and Chief Executive Officer of Eldorado. “Our growth continues to be broad-based across the portfolio as Adjusted EBITDA improved at 12 of our 19 properties. As a result, our third quarter property Adjusted EBITDA margin increased 300 basis points year over year to 26.6% while our consolidated Adjusted EBITDA margin rose 370 basis points to 25.2%.

“Our implementation of best practice operating strategies across the portfolio continued to drive margin expansion as we continue to identify additional refinements to our marketing and promotional spend and streamline our food and beverage operations, while also reducing corporate expense, which declined over 30% compared to last year. We also continue to make significant progress on our synergy plan following our acquisition of Isle of Capri earlier this year as we achieved our target of $35 million of annual synergies within four months of closing the transaction.

“Eldorado has established a track record of success in growing operations through acquisitions by identifying and executing synergy opportunities, implementing our proven operating model focused on providing best-in-class guest service and market-leading amenities and investing in return-focused amenity upgrades, where appropriate, to grow property results. Work completed to date on our $50 millionRenoTri-Properties improvement program includes upgrades to approximately 600 rooms at Circus Circus and 153 rooms at Eldorado Reno, a new Starbucks café added at Eldorado Reno in the third quarter, a new poker room and Canter’s Deli at Silver Legacy and a range of amenity upgrades at Circus Circus including a variety of new food and beverage offerings. These facility enhancements have created a more integrated experience across the Reno Tri-Properties while offering unique guest experiences at each property, which is helping drive higher gaming revenue and increases in room rate and occupancy, all of which contributed to the more than 34% Adjusted EBITDA growth in our West region in the third quarter.

“We believe that we are well positioned for further growth as we benefit from scale that can mitigate property-specific challenges, our continued successful integration of the Isle of Capri properties, additional opportunities to realize synergies, and higher guest satisfaction and improved traffic at our properties following return-focused facility upgrades. We operate in a number of markets that are growing and we are applying operational discipline in our efforts to drive EBITDA even in low or no growth markets.”

Balance Sheet and Liquidity

At September 30, 2017, Eldorado had $134.9 million in cash and cash equivalents and $21.3 million in restricted cash. In September, the Company completed a $500 million add-on offering to its outstanding 6% senior notes due 2025, the proceeds of which were used to repay all of the outstanding borrowings under its revolving credit facility and to repay a portion of the outstanding borrowings under the Company’s term loan facility and related accrued interest. As a result, outstanding indebtedness at September 30, 2017 totaled $2.3 billion, with no amounts outstanding on the Company’s revolving credit facility. Capital expenditures in the third quarter and first nine months of 2017 totaled $23.4 million and $53.2 million, respectively. The Company expects 2017 full-year capital expenditures of approximately $80 million, with $27 million allocated to project cap-ex and the remaining $53 million for maintenance cap-ex.

“We continue to focus on extracting synergies following the May acquisition of Isle of Capri, and we achieved our target of $35 million in annual synergies in only four months,” said Tom Reeg, President and Chief Financial Officer. “Our expanded scale and success in expanding property-level margins is resulting in significant EBITDA growth which, combined with lower interest expense and modest capital expenditures, is driving higher free cash flow, allowing us to continue to reduce leverage while providing us the financial flexibility and capacity to seek additional acquisition opportunities.”

On August 22, 2016, Isle entered into an agreement to sell Lake Charles for aggregate consideration of $134.5 million, subject to certain adjustments. The transaction remains subject to Louisiana Gaming Control Board approval and other customary closing conditions and, if obtained, the transaction is expected to be completed by December 31, 2017. The Company intends to allocate all of the net proceeds from the sale to debt reduction. The operations of Lake Charles have been classified as discontinued operations and as assets held for sale for all periods presented.

Summary of 2017 Third Quarter Region Results

Reflecting the completion on May 1 of the Company’s acquisition of Isle of Capri, Eldorado reports results in four regions. The reporting format is consistent with changes the Company has made in its management reporting structure.

West Region(Reno Tri-Properties, Isle Casino Hotel Black Hawk and Lady Luck Casino Black Hawk)

Net revenue for the West Region properties for the quarter ended September 30, 2017 increased approximately 7.9% to $132.8 million compared to $123.0 million in the prior-year period, while operating income rose to $32.6 million from $22.8 million in the year-ago quarter. Adjusted EBITDA increased 34.5% to $40.4 million reflecting an Adjusted EBITDA margin of 30.4% compared to Adjusted EBITDA of $30.0 million on an Adjusted EBITDA margin of 24.4% in the prior-year period. Adjusted EBITDA increased year over year at the Reno Tri-Properties and at both Isle Black Hawk and Lady Luck Black Hawk with the combined Adjusted EBITDA margin for the Black Hawk properties exceeding 30% in the third quarter of 2017.

Midwest Region(Isle Casino Waterloo, Isle Casino Bettendorf, Isle of Capri Casino Boonville, Isle Casino Cape Girardeau, Lady Luck Casino Caruthersville and Isle of Capri Casino Kansas City)

Net revenue for the Midwest Region properties for the quarter ended September 30, 2017 decreased approximately 2.6% to $103.5 million compared to $106.3 million in the prior-year period, while operating income rose to $24.3 million from $22.5 million in the year-ago quarter. Adjusted EBITDA rose approximately 2.4% to $32.4 million as the Adjusted EBITDA margin for the segment rose 150 basis points to 31.3%. Adjusted EBITDA increased year over year at four of the six Midwest Region properties and was essentially flat at one property. Adjusted EBITDA for the Midwest Region in the prior-year period was $31.7 million reflecting an Adjusted EBITDA margin of 29.8%.

South Region(Isle Casino Racing Pompano Park, Eldorado Shreveport, Isle of Capri Casino Lula and Lady Luck Casino Vicksburg)

Net revenue for the South Region properties for the quarter ended September 30, 2017 declined approximately 11.6% to $81.7 million compared to $92.4 million in the prior-year period, inclusive of an impact of approximately $2.1 million related to Hurricane Irma. Operating income of $11.3 million compared to $14.1 million in the year-ago quarter and Adjusted EBITDA declined 13.5% to $17.6 million compared to Adjusted EBITDA of $20.3 million in the prior-year period. Hurricane Irma impacted the South region properties’ Adjusted EBITDA by approximately $1.5 million and historically low table hold and Hurricane Harvey impacted Adjusted EBITDA at Eldorado Shreveport. As a result, Adjusted EBITDA margin for the region declined 50 basis points to 21.5%.

East Region(Presque Isle Downs and Casino, Lady Luck Casino Nemacolin, Eldorado Scioto Downs Racino and Mountaineer Casino, Racetrack and Resort)

Net revenue for the East Region properties for the quarter ended September 30, 2017 declined approximately 0.7% to $126.7 million compared to $127.7 million in the prior-year period, while operating income grew to $21.1 million from $14.2 million in the year-ago quarter. Despite the modest revenue decline, Adjusted EBITDA for the East Region rose 16.7% to $27.9 million compared to Adjusted EBITDA of $23.9 million in the prior-year period as the East region’s Adjusted EBITDA margin improved 330 basis points to 22.0%. All four of the East region’s properties delivered double digit year-over-year Adjusted EBITDA growth, including the eleventh consecutive quarter of Adjusted EBITDA growth for Eldorado Scioto Downs and the third consecutive quarter of double digit growth at Mountaineer Casino, Racetrack & Resort which continues to benefit from the Company’s initiatives to improve amenities and right-size operating expenses to match current visitation and revenue volumes.

Reconciliation of GAAP Measures to Non-GAAP Measures

Adjusted EBITDA (defined below), a non GAAP financial measure, has been presented as a supplemental disclosure because it is a widely used measure of performance and basis for valuation of companies in our industry and we believe that this non GAAP supplemental information will be helpful in understanding the Company’s ongoing operating results. Adjusted EBITDA represents operating income (loss) before depreciation and amortization, stock based compensation, transaction expenses, S-1 expenses, severance expenses and other, which includes equity in income (loss) of unconsolidated affiliates, (gain) loss on the sale or disposal of property, and other regulatory gaming assessments, including the impact of the change in regulatory reporting requirements, to the extent that such items existed in the periods presented. Adjusted EBITDA is not a measure of performance or liquidity calculated in accordance with U.S. GAAP, is unaudited and should not be considered an alternative to, or more meaningful than, net income (loss) as an indicator of our operating performance. Uses of cash flows that are not reflected in Adjusted EBITDA include capital expenditures, interest payments, income taxes, debt principal repayments and certain regulatory gaming assessments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide EBITDA information may calculate EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.

Third Quarter Conference Call

Eldorado will host a conference call at 4:30 p.m. ET today. Senior management will discuss the financial results and host a question and answer session. The dial in number for the audio conference call is 719/325-2408, conference ID 7971486 (domestic and international callers). Participants can also access a live webcast of the call through the “Events & Presentations” section of Eldorado’s website at http://www.eldoradoresorts.com/ and a replay of the webcast will be archived on the site for 90 days following the live event.

About Eldorado Resorts, Inc.

Eldorado Resorts is a leading casino entertainment company that owns and operates nineteen properties in ten states, including Colorado, Florida, Iowa, Louisiana, Mississippi, Missouri, Nevada, Ohio, Pennsylvania and West Virginia. In aggregate, Eldorado’s properties feature approximately 20,000 slot machines and VLTs, more than 550 table games and over 6,500 hotel rooms. For more information, please visit www.eldoradoresorts.com.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.Forward-looking statements include statements regarding our strategies, objectives and plans for future development or acquisitions of properties or operations, as well as expectations, future operating results and other information that is not historical information.When used in this press release, the terms or phrases such as “anticipates,” “believes,” “projects,” “plans,” “intends,” “expects,” “might,” “may,” “estimates,” “could,” “should,” “would,” “will likely continue,” and variations of such words or similar expressions are intended to identify forward-looking statements.Although our expectations, beliefs and projections are expressed in good faith and with what we believe is a reasonable basis, there can be no assurance that these expectations, beliefs and projections will be realized.There are a number of risks and uncertainties that could cause our actual results to differ materially from those expressed in the forward-looking statements which are included elsewhere in this press release.Such risks, uncertainties and other important factors include, but are not limited to:Eldorado’s ability to promptly and effectively integrate the business of Eldorado and Isle and realize synergies resulting from the combined operations; our substantial indebtedness and the impact of such obligations on our operations and liquidity; competition; sensitivity of our operations to reductions in discretionary consumer spending and changes in general economic and market conditions; governmental regulations and increases in gaming taxes and fees in jurisdictions in which we operate; and other risks and uncertainties described in our reports on Form 10-K, Form 10-Q and Form 8-K.

In light of these and other risks, uncertainties and assumptions, the forward-looking events discussed in this press release might not occur.These forward-looking statements speak only as of the date of this press release, even if subsequently made available on our website or otherwise, and we do not intend to update publicly any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as may be required by law.

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Eldorado Resorts, Inc.
Thomas Reeg, 775-328-0112
President and Chief Financial Officer
investorrelations@eldoradoresorts.com
or
JCIR
Joseph N. Jaffoni, Richard Land, 212-835-8500
eri@jcir.com

Source: Eldorado Resorts, Inc.